Private pay home care is nonmedical home care that's paid for out of pocket. The services provided help seniors to live at home rather than moving to a senior living facility. In 2021, nearly 65% of families paid for home care services out of pocket, according to a survey conducted by Home Care Pulse.
Understanding the various ways you can use personal funds to pay for home care can seem overwhelming. Read on to learn more about private pay home care options and sources of assistance that can help you create the right care plan to fit your loved one’s needs and budget.
What services are available with private pay home care?
Nonmedical home care services offer support for seniors and family caregivers. The most common types of home care include the following:
- Personal care, which provides assistance with activities of daily living (ADLs) such as mobility, bathing, and dressing
- Homemaker services, which offers help with household tasks such as light housekeeping and meal preparation
- Companion care, which provides social interaction to help reduce the impact of loneliness
Keep in mind, there are differences between nonmedical home care and home health care. While both offer support for seniors in their homes, home health care provides medically necessary, short-term care that is typically prescribed by a doctor and often covered at least in part by insurance.
How to afford private pay home care
Families have several options when considering how to pay for home care. You may consider using funds from one of the following sources, or combine several to finance the care your loved one needs:
- Individual retirement accounts
- Health savings accounts
- Pensions
- Investments
- Annuities
- Real estate
- Social Security benefits
Private pay home care may also be financed by using a reverse mortgage if your loved one owns a home, cashing in a life insurance policy, or activating a previously purchased long-term care insurance policy.
Reverse mortgage
Homeowners can borrow money against the value of their home to pay for home care using a reverse mortgage loan. The amount borrowed in a reverse mortgage comes due when the borrower no longer lives in the home as their primary residence, sells the home, or passes away.
Read: Using a Reverse Mortgage Loan to Age in Place
Life insurance
Life insurance policies are another way families can cover private pay home care costs. Some policies offer a cash advance called an accelerated death benefit where funds are subtracted from the payout a beneficiary will receive when the policyholder dies. Other options include terminating a life insurance policy in exchange for its current cash value or taking a loan on the cash value of the policy. Policies vary, so check with the insurance carrier to confirm what options will work with a specific policy.
Read: How to Use a Life Insurance Policy to Pay for Long-Term Care
Long-term care insurance
Long-term care insurance can be purchased from private companies to cover the costs of several types of care including some in-home care services. Plans vary, so it's important to clarify which benefits are covered and how and when they can be used. It’s also important to plan ahead as age and health conditions may disqualify a senior from some types of coverage.
Read: 8 Factors to Consider Before Buying Long-Term Care Insurance
Does Medicare cover in-home care?
No, Medicare won’t pay for nonmedical home care, but it may cover some of the costs of medically necessary home health care. If your loved one’s doctor has prescribed home health care, they may also receive short-term personal care and homemaker services if the services are detailed in their care plan.
Read: Does Medicare Pay for Home Health Care and In-Home Care?
Does Medicaid cover in-home care?
Yes, however the eligibility requirements and services provided depend on where a senior lives. Be sure to contact the Medicaid agency in your loved one's state for more detailed information.
Read: Does Medicaid Cover Home Care and Home Health Care?
Do veterans benefits cover in-home care?
Yes, if your loved one is a veteran, they may be eligible to receive in-home care services through a variety of VA programs. The VA Aid and Attendance Pension provides financial support for long-term care to veterans who are eligible. The homemaker and home health aide program helps veterans remain safe and independent at home while receiving services from trained caregivers. Several other VA programs provide support for family caregivers such as training and respite.
Additional services to help afford private pay home care
Paying for home care out of pocket can stretch a family’s budget, forcing them to explore other care or payment options. Families may consider combining different care types or utilizing community care options to help reduce costs.
Adult day centers
Adult day centers provide a safe setting where seniors are able to engage in social activities. Many centers also offer supervision, meals, and some health care services. Day centers can offer respite for family caregivers and may be an affordable care alternative for seniors who are aging in place. At $78, the median daily cost for an adult day center is cheaper than the $169 a family may spend for a day of in-home personal care, according to Genworth’s latest Cost of Care Survey.
Community services
Free and low-cost community-based meal services like Meals on Wheels deliver food to the homes of seniors who struggle to prepare meals without assistance. In some communities, nonprofit organizations may offer free respite care that provides family caregivers a break from caregiving and may reduce the frequency of paid caregiver visits.
Support for families navigating private pay home care options
AgingCare offers extensive information on in-home care providers and how to pay for these services. AgingCare’s Care Advisors are also available to help simplify your search for the in-home care solution that fits your loved one’s needs and budget.
Reviewed by Todd Austin, President and COO of Home Care Pulse.
Sources:
2022 Home Care Pulse Benchmarking Report SnapShot (https://www.homecarepulse.com/benchmarking/2022-snapshot/)
Cost of Care Survey (https://www.genworth.com/aging-and-you/finances/cost-of-care.html)